Petrobras (PBR)

Lifting Cost (US$/barrel)

Excluding the impact of the depreciation of the Real, the lifting cost in Brazil climbed by 1% over the 9M-2008 due to the increased number of interventions in the Jubarte and Marlim fields, as well as higher personnel expenses due to the increase in the workforce, partially offset by higher output.

Excluding the impact of the depreciation of the Real, the unit lifting cost in Brazil fell by 4%, chiefly due to higher expenses with well non-recurring interventions in the Campos Basin in the 2Q-20009.

Lifting Cost (US$/barrel)

Excluding the impact of the depreciation of the Real, the lifting cost in Brazil climbed by 4% over the 1H-2008 due to the increased number of well interventions and equipment maintenance in P-34, wells in the Marlim field and the Pargo platform, as well as higher personnel expenses.

Excluding the impact of the appreciation of the Real, the unit lifting cost in Brazil edged up by 2%, chiefly due to higher expenses with extraordinary well interventions in Campos Basin.

12

PETROBRAS SYSTEM		Operating Performance

The lifting cost fell due to the decrease in the average Brazilian oil price used to calculate the government take, partially offset by the increase in the special participation tax rate due to higher output from the new platforms.

The lifting cost moved up due to the increase in the average Brazilian oil price used to calculate the government take, thanks to the international price recovery.

The international unit lifting cost increased due to higher third-party service costs in Argentina, higher prices and the start-up of production in Nigeria, where costs are lower than the average in the Company’s international segment.

The quarter-over-quarter increase was due to higher material and third-party service costs in Argentina and the higher number of well interventions, partially offset by higher output.

13

PETROBRAS SYSTEM		Operating Performance

Lifting Cost (US$/barrel)

Excluding the impact of the depreciation of the Real, the lifting cost in Brazil climbed by 4% over the 1H-2008 due to the increased number of well interventions and equipment maintenance in P-34, wells in the Marlim field and the Pargo platform, as well as higher personnel expenses.

Excluding the impact of the appreciation of the Real, the unit lifting cost in Brazil edged up by 2%, chiefly due to higher expenses with well interventions in Campos Basin.

Lifting Cost (US$/barrel)

Excluding the impact of the depreciation of the Real, the lifting cost in Brazil climbed by 4% over the 1H-2008 due to the increased number of well interventions and equipment maintenance in P-34, wells in the Marlim field and the Pargo platform, as well as higher personnel expenses.

Excluding the impact of the appreciation of the Real, the unit lifting cost in Brazil edged up by 2%, chiefly due to higher expenses with well interventions in Campos Basin.

12

PETROBRAS SYSTEM		Operating Performance

The lifting cost fell due to the decrease in the average Brazilian oil price used to calculate the government take, partially offset by the increase in the special participation tax rate due o due to higher output from the new platforms.

The lifting cost moved up due to the increase in the average Brazilian oil price used to calculate the government take, thanks to the international price recovery.

The international unit lifting cost increased due to higher third-party service costs in Argentina, higher prices and the start-up of production in Nigeria, where costs are lower than the average in the Company’s international segment.

The quarter-over-quarter increase was due to higher material and third-party service costs in Argentina and the higher number of well interventions, partially offset by higher output.

13

PETROBRAS SYSTEM		Operating Performance

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the lifting cost in Brazil climbed by 16% over 2007 due to the higher number of well interventions and scheduled stoppages in the production units, the pay rises related to the 2007/08 and 2008/09 collective bargaining agreements, the expansion of the workforce and the higher initial unit cost of the new production systems, which will gradually come down as production moves up.

Excluding the impact of the depreciation of the Real, the unit lifting cost in Brazil fell by 3% quarter-over-quarter due to higher expenses in the 3Q-2008, fueled by increased intervention and maintenance in the Marlim, Roncador, Marlim Sul and Jubarte fields.

15

PETROBRAS SYSTEM		Operating Performance

The annual upturn in the lifting cost was due to the increase in the average Brazilian oil price used to calculate the government take, based on the international price, and the higher tax rate on the Roncador and Espadarte fields, due to output from the new production systems, FPSO-Cidade do Rio de Janeiro, P-52 and P-54.

The decline was caused by the reduction in the average Brazilian oil price used to calculate the government take, pulled down by the slide in international oil prices, partially offset by the higher tax rate, especially in the Roncador field, due to increased output from the new platforms.

The annual increase in the international lifting cost was caused by higher costs from outsourced services and the pay rise in Argentina, as well as the upturn in the price of maintenance and surveillance services in Colombia, partially offset by the reduction in transport services in the USA.

The quarter-over-quarter upturn in the international lifting cost was due to increased workover and pulling services and the upturn in Argentinean service prices, as well as higher costs in Bolivia from the repair of well tool repair services in the fourth quarter, partially offset by increased output.

16

PETROBRAS SYSTEM		Operating Performance

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the lifting cost in Brazil climbed by 16% over 2007 due to the higher number of well interventions and scheduled stoppages in the production units, the pay rises related to the 2007/08 and 2008/09 collective bargaining agreements, the expansion of the workforce and the higher initial unit cost of the new production systems, which will gradually come down as production moves up.

Excluding the impact of the depreciation of the Real, the unit lifting cost in Brazil fell by 3% quarter-over-quarter due to higher expenses in the 3Q-2008, fueled by increased intervention and maintenance in the Marlim, Roncador, Marlim Sul and Jubarte fields.

15

PETROBRAS SYSTEM		Operating Performance

The annual upturn in the lifting cost was due to the increase in the average Brazilian oil price used to calculate the government take, based on the international price, and the higher tax rate on the Roncador and Espadarte fields, due to output from the new production systems, FPSO-Cidade do Rio de Janeiro, P-52 and P-54.

The decline was caused by the reduction in the average Brazilian oil price used to calculate the government take, pulled down by the slide in international oil prices, partially offset by the higher tax rate, especially in the Roncador field, due to increased output from the new platforms.

The annual increase in the international lifting cost was caused by higher costs from outsourced services and the pay rise in Argentina, as well as the upturn in the price of maintenance and surveillance services in Colombia, partially offset by the reduction in transport services in the USA.

The quarter-over-quarter upturn in the international lifting cost was due to increased workover and pulling services and the upturn in Argentinean service prices, as well as higher costs in Bolivia from the repair of well tool repair services in the fourth quarter, partially offset by increased output.

16

PETROBRAS SYSTEM		Operating Performance

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the lifting cost in Brazil climbed by 18% year-on-year in the 9M-2008 due to the higher number of interventions and scheduled stoppages in the production units, the pay rises related to the 2007/08 and 2008/09 labor agreements, the expansion of the workforce and the higher initial unit cost of the new production systems, which will gradually come down as production moves up.

Excluding the impact of the depreciation of the Real, the unitary lifting cost in Brazil increased by 4% quarter-over-quarter due to the pay rise established by the 2008/2009 labor agreement and higher expenses from intervention and maintenance in the Marlim, Roncador, Marlim Sul and Jubarte fields.

13

PETROBRAS SYSTEM	Operating Performance

The year-on-year increase in the 9M-2008 lifting cost was due primarily to the higher taxes caused by 70% increase in the average Brazilian oil price used to calculate the government take, based on the international price, and the higher tax rate on the Roncador and Espadarte fields, due to the increase in production triggered by the new production systems, FPSO-Cidade do Rio de Janeiro, P-52 and P-54.

Excluding the effects of the depreciation of the Real, the unitary lifting cost rose 4% due to the increase in extraction costs, associated with the higher tax rate, especially in the Roncador Field, due to higher output from the platforms installed in the 4Q-2007.

The year-on-year increase in the international lifting cost was caused by higher costs from outsourced services and the pay rise in Argentina, as well as the increase in the price of maintenance and surveillance services in Colombia, partially offset by the reduction in transport services in the USA.

The quarter-over-quarter increase in the international lifting costs was due to price adjustments by Argentine material suppliers and service providers in August/08 and increased workover activities in Colombia.

14

PETROBRAS SYSTEM	Operating Performance

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the lifting cost in Brazil climbed by 18% year-on-year in the 9M-2008 due to the higher number of interventions and scheduled stoppages in the production units, the pay rises related to the 2007/08 and 2008/09 labor agreements, the expansion of the workforce and the higher initial unit cost of the new production systems, which will gradually come down as production moves up.

Excluding the impact of the depreciation of the Real, the unitary lifting cost in Brazil increased by 4% quarter-over-quarter due to the pay rise established by the 2008/2009 labor agreement and higher expenses from intervention and maintenance in the Marlim, Roncador, Marlim Sul and Jubarte fields.

Pag: 108

The year-on-year increase in the 9M-2008 lifting cost was due primarily to the higher taxes caused by 70% increase in the average Brazilian oil price used to calculate the government take, based on the international price, and the higher tax rate on the Roncador and Espadarte fields, due to the increase in production triggered by the new production systems, FPSO-Cidade do Rio de Janeiro, P-52 and P-54.

Excluding the effects of the depreciation of the Real, the unitary lifting cost rose 4% due to the increase in extraction costs, associated with the higher tax rate, especially in the Roncador Field, due to higher output from the platforms installed in the 4Q-2007.

Pag: 109

The year-on-year increase in the international lifting cost was caused by higher costs from outsourced services and the pay rise in Argentina, as well as the increase in the price of maintenance and surveillance services in Colombia, partially offset by the reduction in transport services in the USA.

The quarter-over-quarter increase in the international lifting costs was due to price adjustments by Argentine material suppliers and service providers in August/08 and increased workover activities in Colombia.

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the lifting cost in Brazil climbed by 15% year-on-year in the 1H-2008, due to higher expenses with drilling rigs and vessels, the more robust oil industry, the higher number of programmed platform stoppages, the wage increase, the expansion of the workforce and the higher initial unit cost of the new production systems that began operations in the 4Q-2007, which will gradually come down as production moves up.

Also excluding the impact of the appreciation of the Real, the unit lifting cost in Brazil climbed by 10% quarter-over-quarter, due to preventive maintenance stoppages in the P-26 and P-33 platforms and programmed stoppages in the platforms in the Marlim and Namorado fields.

13

The year-on-year upturn in the first-half lifting cost was due to higher extraction costs, plus the impact of the increase in international oil prices and the higher tax on production from the new FPSO-Cidade do Rio de Janeiro, P-52 and P-54 systems.

The quarter-over-quarter increase was due to the upturn in the average Brazilian oil price used to calculate the government take, based on the international price, and the higher taxes on the Roncador Field, due to the increase in production triggered by the recently-installed platforms.

The year-on-year increase in the international lifting cost was caused by the higher price of outsourced services and the wage hike in Argentina, as well as the upturn in the price of maintenance and surveillance services in Colombia, partially offset by the reduction in transport services in the United States.

The 2Q-2008 increase over the previous three months was due to the strike in the Cuenca Austral field and the May 2008 pay rise in Argentina, plus workover activities in Colombia.

14

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the lifting cost in Brazil climbed by 15% year-on-year in the 1H-2008, due to higher expenses with drilling rigs and vessels, the more robust oil industry, the higher number of programmed platform stoppages, the wage increase, the expansion of the workforce and the higher initial unit cost of the new production systems that began operations in the 4Q-2007, which will gradually come down as production moves up.

Also excluding the impact of the appreciation of the Real, the unit lifting cost in Brazil climbed by 10% quarter-over-quarter, due to preventive maintenance stoppages in the P-26 and P-33 platforms and programmed stoppages in the platforms in the Marlim and Namorado fields.

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the annual unit lifting cost in Brazil climbed by 8% year-on-year, due to the wage increase, the expansion of the workforce and the higher initial unit cost of the new production systems, which will gradually come down as production moves up.

Also excluding the impact of the appreciation of the Real, the unit lifting cost inched down by 1% over the 4Q-2007 due to the wage hike in the latter quarter, partially offset by higher expenditure in the 1Q-2008 on corrective and preventive maintenance and the programmed stoppages of the P-20 and PPM-1 platforms.

13

The year-on-year upturn in the first-quarter lifting cost was due to higher extraction costs, the impact of the increase in international oil prices on government participations, and the operational start-up of the P-34, FPSO-Cidade do Rio de Janeiro, FPSO-Cidade de Vitória, P-52 and P-54 platforms.

The increase over the 4Q-2007 was due to the upturn in the average Brazilian oil price used to calculate the government participations, based on the international price.

The year-on-year increase in the international lifting cost was caused by the higher price of outsourced services and materials in Argentina.

In comparison with the 4Q-2007, the unit lifting cost recorded a decline due to the reduction in expenses from outsourced services in Argentina caused by the lower number of well repairs in the first quarter.

14

Lifting Cost (US$/barrel)

Excluding the impact of the appreciation of the Real, the annual unit lifting cost in Brazil climbed by 9% over 2006, due to the higher price of goods and service in the oil industry, increased expenditure on vessels and drills, the wage increase, the expansion of the workforce and the higher initial unit costs of FPSO-Cidade de Vitória, FPSO-Cidade do Rio de Janeiro, FPSO-Piranema and the P-52 and P-54 platforms, which will gradually come down as production moves up.

Also excluding the impact of the appreciation of the Real, the 4Q-2007 unit lifting cost increased by 8% over the previous quarter due to the wage hike and the higher consumption of materials due to the startup of four new production systems in the final quarter, whose higher unit costs will tend to come down as production moves up.

13

PETROBRAS SYSTEM	Operational Performance

The annual lifting cost moved up due to higher extraction costs and the impact of the increase in international oil prices on government participations, offset by the effect of the natural decline in production in certain fields on these participations.

The domestic unit lifting cost in the fourth quarter increased due to the upturn in the average Brazilian oil price used to calculate the government participations, based on the international price, as well as the already-mentioned rise in extraction costs.

The international lifting cost recorded an annual upturn due to the decline in output and the increase in the price of third-party services and materials in Argentina, and higher expenses in the USA, thanks to the return of normal production, which had been partially shut down in 2006, and the operational startup of the deep-water Cottonwood field, and in Angola, due to the recovery of mature wells and installation maintenance.

The international lifting cost also moved up in the fourth quarter due to the higher price of third-party services in Argentina, partially offset by lower maintenance and repairs expenses in Angola and a decline in expenses from Cottonwood, thanks to cheaper chemicals and a reduction in logistics expenses.

14

PETROBRAS SYSTEM	Operational Performance

Lifting Cost (US$/barrel)

The year-to-date unit lifting cost in Brazil, excluding government participations, increased by 16% in relation to the first nine months of 2006. Excluding the impact of the appreciation of the Real, the unit lifting cost climbed by 10%, pushed by higher operating expenses due to the heating up of the industry and the increase in the workforce needed to operate new projects.

In comparison with the 2Q-2007, the third-quarter unit domestic lifting cost, excluding government participations, climbed by 4%. Excluding the effects of the period appreciation of the Real, the unit lifting cost would have increased by 2%, mainly due to greater use of services and support vessels related to well maintenance.

Lifting Cost (US$/barrel)

The year-to-date unit lifting cost in Brazil, excluding government participations, increased by 16% in relation to the first nine months of 2006. Excluding the impact of the appreciation of the Real, the unit lifting cost climbed by 10%, pushed by higher operating expenses due to the heating up of the industry and the increase in the workforce needed to operate new projects.

In comparison with the 2Q-2007, the third-quarter unit domestic lifting cost, excluding government participations, climbed by 4%. Excluding the effects of the period appreciation of the Real, the unit lifting cost would have increased by 2%, mainly due to greater use of services and support vessels related to well maintenance.

11

PETROBRAS SYSTEM	Operational Performance

Including government participations, the year-to-date lifting cost recorded a 3% year-on-year increase. Excluding the impact of the appreciation of the Real, the unit lifting cost dipped by 0.4% .

Including government participations, the domestic unit lifting cost in the third quarter rose by 12% over the 2Q-2007, due to the upturn in the domestic oil reference price.

The year-to-date international unit lifting cost climbed 34% over the 9M-2006, due to higher oil industry costs, the return to normal operations, which had been jeopardized by the partial production stoppage in 2006; the operational start-up of the Cottonwood field in February/07, with its greater average costs; and maintenance services and the recovery of mature wells in Angola.

Compared to the 2Q-2007, the third-quarter international unit lifting cost remained virtually flat.

12

PETROBRAS SYSTEM	Operational Performance

Lifting Cost (US$/barrel)

The unit lifting cost in Brazil, excluding government take, increased by 14% in relation to 1Q-2006. Excluding the impact of the 4% appreciation of the Real on lifting costs denominated in Reais, unit lifting costs climbed 11%. The upturn was due to increased expenditure on interventions in wells, preventive and corrective maintenance and the chartering costs of drilling and associated support ships; higher personnel expenses due to wage hikes and the increase in the workforce; and the higher unitary costs of new platforms FPSO-Capixaba (Golfinho), P-34 (Jubarte) and FPSO-Cidade do Rio de Janeiro (Espadarte), which are expected to trend down as they utilize their full capacity.

In comparison with 4Q-2006, the unit domestic lifting cost, excluding government take, decreased by 1% because of less use of repair materials for well intervention and equipment replacement, partially offset by decrease in production due to programmed stoppages in the period.

Lifting Cost (US$/barrel)

The unit lifting cost in Brazil, excluding government take, increased by 14% in relation to 1Q-2006. Excluding the impact of the 4% appreciation of the Real on lifting costs denominated in Reais, unit lifting costs climbed 11%. The upturn was due to increased expenditure on interventions in wells, preventive and corrective maintenance and the chartering costs of drilling and associated support ships; higher personnel expenses due to wage hikes and the increase in the workforce; and the higher unitary costs of new platforms FPSO-Capixaba (Golfinho), P-34 (Jubarte) and FPSO-Cidade do Rio de Janeiro (Espadarte), which are expected to trend down as they utilize their full capacity.

In comparison with 4Q-2006, the unit domestic lifting cost, excluding government take, decreased by 1% because of less use of repair materials for well intervention and equipment replacement, partially offset by decrease in production due to programmed stoppages in the period.

Including government take, the domestic unit lifting cost dropped by 8% over 4Q-2006, once again due to the decline in the domestic oil reference price (in line with international prices), as well as reduced output from the Marlim field, as a result of the scheduled maintenance stoppage in the P-37 platform, which reduced the tax rate used to assess Special Participation.

The international unit lifting cost increased by 31% in comparison with 1Q-2006, due to increased expenditure in the United States following the return to normal operations which had been affected by hurricanes Rita e Katrina in 2006; the operational start-up of the Cottonwood field in February/07; and higher expenditure in Angola on restructuring, maintenance of the facilities and recovery of mature wells.

12

The international unit lifting cost decreased by 11% in 1Q-2007 versus the prior three months, due to reduced expenditure on well repairs in Argentina, as well as on restructuring, maintenance of the facilities and the recovery wells.

Lifting Cost (US$/barrel)

11

Lifting costs in Brazil for 2006, excluding government take, increased 15% when compared to 2005. After adjusting for the effect of the Real’s 11% appreciation against the U.S. dollar, the increase lifting costs rose by 6% and was compensated by an increase in oil and gas production. The growth stems from higher costs for drilling rigs, as well as higher costs for maintenance and well intervention, salary adjustments, an increase of employees and higher unit costs than originally anticipated in the FPSO-Capixaba in Golfinho and P-34 in Jubarte projects, which will decline as as production increases. Regarding FPSO-Capixaba maximum production capacity is now expected to reach 60 thousand barrels/day, which is below the original production estimate of 90 thousand barrels/day.

When compared to 3Q06, lifting costs in the country during 4Q06, excluding the government take, grew 9%, primarily from higher expenses of drilling rigs, corrective maintenance, services and materials for well and pipeline interventions and oil rigs, mainly the chemical cleansing in Marlim Sul, as well as personnel cost increases due to a salary readjustment and higher number of employees, which were partially compensated by higher oil production.

Considering the government take, lifting cost in 2006 increased 20% from 2005 as a result of rising lifting costs, the already commented increase in the average reference price for domestic oil used to calculate government take, (which are based on international prices), and higher production in the Barracuda and Caratinga fields following stabilization at full capacity in June 2005, allowing for higher royalties and special participations, as well as the start of operation in the Albacora Leste and Golfinho fields.

Considering the government take, the lifting cost in the country during 4Q06 was 3% below that of 3Q06 due to a decrease in the average reference price for domestic oil, (linked to the decrease of the international oil prices), but which was partially compensated by the increase in tax bracket in Albacora Leste basin, as a result of a greater production and the increase in lifting costs already mentioned.

During 2006, the international lifting cost increased 16% from 2005 as a result of lower volumes produced and greater expenses associated with third party services (explained by higher tariffs for contracted services), materials due the pipeline reforms, equipment and repairs in wells, in addition to salaries increases due to labor negotiations, the expense increase in Angola due to a new operator that will seek to restructure and intervene in Block 2 to maintain and improve  installations and recover production of mature wells.

In 4Q06, the international lifting cost increased by 40% from 3Q06 as production decline, expenses associated with well repairs and maintenance increased in Argentina along with higher salaries derived from collective contractual agreements and an increase in the expenses passed on by the new operator in Angola for the restructuring and intervention in Block 2 to maintain and improve installations and work over mature wells.

Lifting Cost (US$/barrel)

Lifting cost in Brazil for the first nine months of 2006, excluding government take, increased 13% versus the comparable period of 2005. After discounting the effects of the 13% appreciation of the Real for costs denominated in local currency, lifting costs remained stable, with higher costs for well interventions for preventive and corrective maintenance, and contractual increases in day rates for drilling rigs, offset by the increase in production at the P-43, P-48, P-50 and FPSO-Capixaba platforms.

When compared to the 2Q06, lifting cost in Brazil, excluding government take, increased by 9%, mainly as a result of higher operating transportation costs, oil rig costs for well interventions, corrective maintenance, as well as additional costs associated with the start-up of the Albacora Leste and Golfinho fields, which increased the level of average unit cost for extraction in Brazil.

Lifting costs in Brazil for the first nine months of 2006, including government take, increased by 24% compared to the same period of 2005. The increase is primarily because of the aforementioned increase in extraction costs, as well as the average reference price used to calculate government take for domestic oil, as a result of the increase in international oil prices; and due to increased production at the Barracuda and Caratinga fields after achieving production stability in June 2005, which increased royalties and special participation charges.

103

Including government take, third quarter lifting costs in Brazil increased by 3% versus the second quarter 2006, reflecting the aforementioned increase in extraction costs.

For the first nine months of 2006, international lifting costs increased by 13% compared to the same period of the previous year. This increase is mainly due to lower volume produced, higher third party expenses and materials for the Argentina operations, including pipeline and equipment as well as well repairs.

International lifting costs for 3Q06 increased by 0.3% when compared to the 2Q06, mainly as a result of higher material and third party expenses in Argentina due to pipeline and equipment reforms, as well as oil well repairs.

Lifting Cost (US$/barrel)

In the 1H-2006, the domestic lifting cost, excluding government take, expressed in US$ increased 9% in relation to the 1H-2005. After adjusting for the 15% appreciation of the real for lifting costs denominated in reais, lifting cost declined 8% in relation to the 1H-2005. The decline was a result of the increase in oil and gas production, at the Barracuda, Caratinga, Albacora Leste and Golfinho fields.

In relation to the 1Q-2006, domestic lifting cost, excluding governmental take, declined 3% in US$, due to higher spending during the first quarter on materials for turbine maintenance, gas line repairs and substitution of collection and drainage lines.

Including government take, 1H-2006 lifting cost increased 27% in relation to the 1H-2005, because of the increase in average reference price used to calculate royalties and Special Participation of domestic oil, in line with the increased international oil prices. Additionally the increased productivity at the Barracuda and Caratinga fields after production startup in June 2005, increased Special Participation because of the higher tax bracket associated with these fields.

Including government take, domestic lifting costs for the 2Q-2006 were in line with the previous quarter, recording an increase of 1%.

In the 1H-2006, international lifting costs increased 15% in comparison with the same period of the prior year due to higher costs for third party services and materials for the Argentine unit.

For the 2Q-2006, international lifting costs increased 6% in relation to 1Q-2006 mainly because of higher costs for third party services in Argentina and higher security and environmental costs in Ecuador.

12

Lifting Cost (US$/barrel)

101

1Q-2006 lifting costs in Brazil, excluding government take increased 6% compared to 1Q-2005. After discounting the effects of a 19% appreciation of the real against the U.S. dollar, which caused the local currency component of lifting costs to increase when expressed in US$’s, the lifting costs declined 11% in comparison with 1Q-2005. The decline was mainly due to increased production of oil and gas, primarily at the Barracuda and Caratinga fields.

Excluding government take, lifting costs in Brazil in 1Q-2006 increased 4% in relation to 4Q-2005. After discounting the effects of a 3% appreciation of the Brazilian real against the U.S. dollar, lifting costs increased 1% in comparison with 4Q-2005.

Lifting costs including government take, increased 27% over 1Q-2005 due to the increase in the average reference price used to calculate government take for domestic oil, as a result of the increase in international oil prices.

Including government take, lifting costs in 1Q-2006 increased 8%, as compared to 4Q-2005, due to the higher reference price levels for domestic oil, as a result of higher international prices.

The international lifting cost increased 18% compared with 1Q-2005 due to greater third party expenses and materials for the Argentina operations, and materials consumption for maintenance in Colombia.

102

In 1Q-2006, international lifting cost declined 16% in relation to 4Q-2005 due to lower equipment maintenance costs for the Colombia operations and personnel in the Argentina operations.

Lifting Cost (US$/barrel)

1Q-2006 lifting costs in Brazil, excluding government take increased 6% compared to 1Q-2005. After discounting the effects of a 19% appreciation of the real against the U.S. dollar, which caused the local currency component of lifting costs to increase when expressed in US$’s, the lifting costs declined 11% in comparison with 1Q-2005. The decline was mainly due to increased production of oil and gas, primarily at the Barracuda and Caratinga fields.

Excluding government take, lifting costs in Brazil in 1Q-2006 increased 4% in relation to 4Q-2005. After discounting the effects of a 3% appreciation of the Brazilian real against the U.S. dollar, lifting costs increased 1% in comparison with 4Q-2005.

Lifting costs including government take, increased 27% over 1Q-2005 due to the increase in the average reference price used to calculate government take for domestic oil, as a result of the increase in international oil prices.

Including government take, lifting costs in 1Q-2006 increased 8%, as compared to 4Q-2005, due to the higher reference price levels for domestic oil, as a result of higher international prices.

The international lifting cost increased 18% compared with 1Q-2005 due to greater third party expenses and materials for the Argentina operations, and materials consumption for maintenance in Colombia.

In 1Q-2006, international lifting cost declined 16% in relation to 4Q-2005 due to lower equipment maintenance costs for the Colombia operations and personnel in the Argentina operations.

9

Lifting Cost (US$/barrel)

Lifting costs in Brazil, excluding government take increased 34% in 2005 as compared with 2004. After discounting the effect of a 17% appreciation in the Brazilian real against the U.S. dollar, in association with the percent of expenses in national currency over the costs for this activity, the lifting cost increased 10% over 2004 primarily as a consequence of higher chartering fees for rigs linked to the increases in the international price of oil, as well as higher expenses for transportation, underwater operations, restoration and maintenance, and chemicals used to unlock and eliminate toxic gases, increased salaries and benefits resulting from the collective labor agreements for 2004/2005 and 2005/2006, increases in the workforce, and the actuarial review performed at the end of 2004 that prompted an increase to the provisions for future health care and pension benefits.

The 12% increase in lifting costs in Brazil, excluding government take, for 2005-4Q, when compared with 2005-3Q, is due primariliy to higher expenses with well interventions and specialized technical services for restoration and equipment maintenance, as well as third party charters. After discounting the effects of the 4% appreciation in the average exchange rate of the Real against the U.S. dollar, lifting costs were up 7% versus 3Q-2005.

Lifting costs in Brazil for 2005, including government take, increased 37% in relation to 2004, in response to the generalized increases in operating expenses, mentioned above, as well as higher special participation tax resulting from the higher average reference price for domestic oil, based in international market quotations, besides the 17% Real appreciation against the US dollar. The inclusion of P-43 and P-48 in the basis used to calculate the special participation as of 2005 also contributed to the total increase in government participation through the special participation tax.

Brazilian lifting costs in 2005-Q4, taking into account government participation, increased 6% over 2005-Q3 as a result of the previously mentioned lifting cost increase, and government participation (3%), mainly in the Marlim Field, caused by the higher reference price levels for domestic oil.

The international lifting cost increased 12% in 2005 in relation to 2004 due to greater third party expenses, personnel and equipment maintenance costs in the Argentine operation.

10

In 2005-Q4, the international lifting cost increased 28% in relation to 2005-Q3 due to greater maintenance services and equipment expenses in the Bolivian unit and personnel expenses in Argentina.

Lifting Cost (US$/barrel)

Lifting costs in Brazil, excluding government take increased 34% in 2005 as compared with 2004. After discounting the effect of a 17% appreciation in the Brazilian real against the U.S. dollar, in association with the percent of expenses in national currency over the costs for this activity, the lifting cost increased 10% over 2004 primarily as a consequence of higher chartering fees for rigs linked to the increases in the international price of oil, as well as higher expenses for transportation, underwater operations, restoration and maintenance, and chemicals used to unlock and eliminate toxic gases, increased salaries and benefits resulting from the collective labor agreements for 2004/2005 and 2005/2006, increases in the workforce, and the actuarial review performed at the end of 2004 that prompted an increase to the provisions for future health care and pension benefits.

The 12% increase in lifting costs in Brazil, excluding government take, for 2005-4Q, when compared with 2005-3Q, is due primariliy to higher expenses with well interventions and specialized technical services for restoration and equipment maintenance, as well as third party charters. After discounting the effects of the 4% appreciation in the average exchange rate of the Real against the U.S. dollar, lifting costs were up 7% versus 3Q-2005.

Lifting costs in Brazil for 2005, including government take, increased 37% in relation to 2004, in response to the generalized increases in operating expenses, mentioned above, as well as higher special participation tax resulting from the higher average reference price for domestic oil, based in international market quotations, besides the 17% Real appreciation against the US dollar. The inclusion of P-43 and P-48 in the basis used to calculate the special participation as of 2005 also contributed to the total increase in government participation through the special participation tax.

Brazilian lifting costs in 2005-Q4, taking into account government participation, increased 6% over 2005-Q3 as a result of the previously mentioned lifting cost increase, and government participation (3%), mainly in the Marlim Field, caused by the higher reference price levels for domestic oil.

The international lifting cost increased 12% in 2005 in relation to 2004 due to greater third party expenses, personnel and equipment maintenance costs in the Argentine operation.

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In 2005-Q4, the international lifting cost increased 28% in relation to 2005-Q3 due to greater maintenance services and equipment expenses in the Bolivian unit and personnel expenses in Argentina.

Lifting Cost (US$/Barrel)

The per/barrel lifting cost in Brazil, before government take, increased 33% during the January -September 2005 period as compared to the same period in 2004. Discounting the effects of the real’s 16% appreciation associated with the percent of expenses in domestic currency on the expenses of this activity, the unit lifting cost increased 11% in relation to January through September 2004.This was primarily due to the rise in service costs linked to the increase in international oil prices, particularly for exploratory drilling rigs and contracted platforms, higher expenses for maintenance and chemical products for unblocking and elimination of toxic gases, the increases incurred with salaries and benefits in relation to the 2004/2005 Collective Bargaining Agreement, the increased workforce, and the actuarial revision at the end of 2004, which raised the expenses provisioned for the health and pension plans also contributed to the higher per unit costs.

In 3Q-2005, the 19% increase in the per/barrel lifting cost in Brazil, without government take when compared to 2Q-2005, is mainly due to the higher expenses for third-party chartering of platforms. Discounting the effects of the 6% appreciation of the real, the unit lifting cost increased 13% in relation to 2Q-2005.

From January through September 2005, the unit lifting cost in Brazil, with government take, grew 39% in relation to the same period of 2004, which was a result of the already-mentioned increase in operating expenses, as well as the higher expenses with government take due to the increase in the average reference price for domestic oil, based on the variations that occurred in prices in the international market, and the real’s 16% appreciation against the U.S. dollar

In comparison with 2Q-2005, the lifting cost in Brazil in 3Q-2005, with government take, increased 16%, impacted by the increase in the average reference price for domestic oil

From January through September 2005, the international unit lifting cost rose 8% in relation to the same period of the prior year, due to higher expenses with contractors, personnel, and equipment maintenance in Argentina.

In 3Q-2005, the international unit lifting cost rose 1.5% over 2Q-2005, due to higher expenses for equipment maintenance services and personnel in Colombia.

Lifting Cost (US$/barrel)

The lifting cost in the country without government take in 1H-2005 increased 28% over 1H-2004, due mainly to higher expenses for technical services for restoration and maintenance, mobilization and construction of structures and equipments, personnel transport, support for vessels, undersea operations, platform freight with third parties, consumption of chemical products to clear out and eliminate toxic gases – principally at Marlim, plus the increases in salaries and benefits in the 2004/2005 Collective Bargaining Agreement, the larger workforce and the actuarial revision at the end of 2004, which increased the expenses provisioned for the health and pension plans. Discounting the effects of the real’s 13% appreciation, associated with the percent of expenses in domestic currency over the expenses related to this activity, the unit lifting cost increased 16% in relation to 1H-2004.

The 18% decrease in the unit lifting cost in the country without government take in 2Q-2005 in relation to 2Q-2004 is mainly due to higher expenses in the first quarter because of the stops at the fixed platforms in the Namorado 1 and 2 fields, in the Cherne 1 and 2 fields, in the Garoupa 1 field, and the in the Corvina field, plus the general stop at platform P-19 (Marlim) for a change of gas flaring equipment. These effects were partially offset by higher expenses in 2Q-2005 for the use of well intervention services and undersea line maintenance, and in access routes to production fields. Discounting the effects of the 7% appreciation of the real, the unit lifting cost fell 24% in relation to 1Q-2005.

In 1H-2005, the unit lifting cost in the country with government take grew 35% over 1H-2004, a result of the already-mentioned higher operating expenses, and the larger expenses with government take due to the increase in the average reference price for domestic oil, based on the variations in international market prices, and the 13% appreciation of the real against the U.S. dollar. In comparison to 1Q-2005, the 2Q-2005 lifting price in Brazil, considering government take, fell 2% due to the mentioned decrease in expenses. This fall was partially offset by the higher average reference price for domestic oil.

In 2Q-2005, the international unit lifting cost rose 7% over 1Q-2005, because of higher expenses for third-party services, materials, personnel and electricity consumption at the fields in Argentina and Venezuela. At the Colombia unit, expenses related to third-party services for equipment maintenance, expenses for chemical treatment of water and vehicle leasing contributed to the increase.

Lifting Cost (US$/barrel)

The lifting cost in the country without government take in 1H-2005 increased 28% over 1H-2004, due mainly to higher expenses for technical services for restoration and maintenance, mobilization and construction of structures and equipments, personnel transport, support for vessels, undersea operations, platform freight with third parties, consumption of chemical products to clear out and eliminate toxic gases – principally at Marlim, plus the increases in salaries and benefits in the 2004/2005 Collective Bargaining Agreement, the larger workforce and the actuarial revision at the end of 2004, which increased the expenses provisioned for the health and pension plans. Discounting the effects of the real’s 13% appreciation, associated with the percent of expenses in domestic currency over the expenses related to this activity, the unit lifting cost increased 16% in relation to 1H-2004.

The 18% decrease in the unit lifting cost in the country without government take in 2Q-2005 in relation to 2Q-2004 is mainly due to higher expenses in the first quarter because of the stops at the fixed platforms in the Namorado 1 and 2 fields, in the Cherne 1 and 2 fields, in the Garoupa 1 field, and the in the Corvina field, plus the general stop at platform P-19 (Marlim) for a change of gas flaring equipment. These effects were partially offset by higher expenses in 2Q-2005 for the use of well intervention services and undersea line maintenance, and in access routes to production fields. Discounting the effects of the 7% appreciation of the real, the unit lifting cost fell 24% in relation to 1Q-2005.

In 1H-2005, the unit lifting cost in the country with government take grew 35% over 1H-2004, a result of the already-mentioned higher operating expenses, and the larger expenses with government take due to the increase in the average reference price for domestic oil, based on the variations in international market prices, and the 13% appreciation of the real against the U.S. dollar. In comparison to 1Q-2005, the 2Q-2005 lifting price in Brazil, considering government take, fell 2% due to the mentioned decrease in expenses. This fall was partially offset by the higher average reference price for domestic oil.

In 2Q-2005, the international unit lifting cost rose 7% over 1Q-2005, because of higher expenses for third-party services, materials, personnel and electricity consumption at the fields in Argentina and Venezuela. At the Colombia unit, expenses related to third-party services for equipment maintenance, expenses for chemical treatment of water and vehicle leasing contributed to the increase.

Lifting Cost (US$/barrel)

Unit lifting cost in the country without government participation in 1Q-2005 increased 38% over 1Q-2004, due mainly to greater consumption of chemical products for the removal of obstructions and elimination of toxic gases, principally at Marlim. The unit lifting cost also increased because of higher expenses for specialized technical services for restoration and maintenance, mobilization and building structures and equipment, personnel transport, vessel support, undersea operations, increases in salaries and benefits in relation to the 2004/2005 Collective Bargaining Agreement, the increased workforce, and the actuarial revision at the end of 2004, which increased the expenses provisioned for the health and pension plans.

The 25% increase in the lifting cost in Brazil without government participation in 1Q-2005 over 1Q-2004 is mostly due to higher expenses with specialized technical services for restoration and maintenance, mobilization and building of structures and equipments, personnel transport, vessel support, undersea operations, increased consumption of chemical products at the Marlim field for elimination of toxic gases, higher expenses for stops at the fixed platforms at the Namorado 1 and 2 fields, at the Cherne 1 and 2 fields, at the Garoupa field 1, and at the Corvina field, as well as the general stop at platform P-19 (Marlim) to change out the gas-burning equipment.

In 1Q-2005, the unit lifting cost in the country including government participation grew 39% over 1Q-2004, which was a result of the increase in operating expenses already mentioned, higher expenses related to government participation due to the increase in the average reference price for domestic oil, based on the variations in international market prices, and the 8% appreciation of the real against the US dollar. In comparison to 4Q-2004, lifting cost in the country in 1Q-2005, including government participation, grew 8%, caused by the mentioned higher expenses. This was partially offset by lower reference prices used to calculate government participation.

In 1Q-2005, the international unit lifting cost increased 4% over 1Q-2004, due to increased maintenance and third-party services expenses in Argentina and the United States.

In 1Q-2005, the international unit lifting cost fell 12%, compared to 4Q-2004, a function of lower expenses for materials and well-maintenance services in Argentina and Colombia.

Lifting Cost (US$/barrel)

The 16% increase in the unit lifting cost in Brazil without government participation in 4Q04 in relation to 3Q04, is largely due to higher expenses for specialized technical services in well restoration, oil transport, collection systems, water injection, inspection and maintenance of surface facilities, utility systems, underwater operations and ocean terminals, and to the higher expenses for salaries and benefits linked to the salary adjustments projected in the collective bargaining agreement.

The unit lifting cost in the country without government participation in fiscal year 2004 increased 27% in relation to fiscal year 2003, largely due to higher expenses for technical services for well restoration and maintenance, exploratory drilling rigs and special boats in the Campos Basin, whose prices are limited by the international price of oil. It also increased because of the higher expenses for materials due to greater consumption of chemical products, and to the expenses for maintenance services at ocean terminals, transport lines and installations associated with the Company’s environmental program, and sea and aerial transport related to operational support of production. Other contributing factors were the higher personnel expenses related to salary adjustments conceded in collective bargaining agreements in September 2003 and 2004, to payment of differences in overtime shift hours set forth in the collective bargaining agreement, to growth in the workforce, and revision of the actuarial calculations for health benefits and future retirements.

In fiscal year 2004, the unit lifting cost in the country with government participation, grew 26% over fiscal year 2003, a result of the already-mentioned increased operating expenses, the higher expenses with government participation due to the increase in the average reference price for domestic oil (24%), and appreciation of the real against the dollar in the period. This is reflected in the larger number of dollars in the conversion of costs in reais (5%), and offset by reduced domestic production of oil and gas in the fields with the largest incidences of government participation, mainly Marlim Sul. In comparison with 3Q04, the lifting cost in the country in 4Q04, considering government participation, grew 17%, caused by the increased reference price for domestic oil and the appreciation of the real against the dollar in the period (6%).

In 4Q04, the international lifting cost increased 15% over 3Q04, a function of the higher expenses for materials and maintenance services for wells in Argentina and Colombia, and operating expenses in the United States.

In fiscal year 2004, the international unit lifting cost increased 6% over fiscal year 2003, due to increased expenses for personnel, materials and third-party services, the operations at Block 18 at PEPSA-Equador, and intervention in wells in Argentina, as well as maintenance expenses in Angola and the United States.

Lifting Cost (US$/barrel)

The 16% increase in the unit lifting cost in Brazil without government participation in 4Q04 in relation to 3Q04, is largely due to higher expenses for specialized technical services in well restoration, oil transport, collection systems, water injection, inspection and maintenance of surface facilities, utility systems, underwater operations and ocean terminals, and to the higher expenses for salaries and benefits linked to the salary adjustments projected in the collective bargaining agreement.

The unit lifting cost in the country without government participation in fiscal year 2004 increased 27% in relation to fiscal year 2003, largely due to higher expenses for technical services for well restoration and maintenance, exploratory drilling rigs and special boats in the Campos Basin, whose prices are limited by the international price of oil. It also increased because of the higher expenses for materials due to greater consumption of chemical products, and to the expenses for maintenance services at ocean terminals, transport lines and installations associated with the Company’s environmental program, and sea and aerial transport related to operational support of production. Other contributing factors were the higher personnel expenses related to salary adjustments conceded in collective bargaining agreements in September 2003 and 2004, to payment of differences in overtime shift hours set forth in the collective bargaining agreement, to growth in the workforce, and revision of the actuarial calculations for health benefits and future retirements.

In fiscal year 2004, the unit lifting cost in the country with government participation, grew 26% over fiscal year 2003, a result of the already-mentioned increased operating expenses, the higher expenses with government participation due to the increase in the average reference price for domestic oil (24%), and appreciation of the real against the dollar in the period. This is reflected in the larger number of dollars in the conversion of costs in reais (5%), and offset by reduced domestic production of oil and gas in the fields with the largest incidences of government participation, mainly Marlim Sul. In comparison with 3Q04, the lifting cost in the country in 4Q04, considering government participation, grew 17%, caused by the increased reference price for domestic oil and the appreciation of the real against the dollar in the period (6%).

In 4Q04, the international lifting cost increased 15% over 3Q04, a function of the higher expenses for materials and maintenance services for wells in Argentina and Colombia, and operating expenses in the United States.

In fiscal year 2004, the international unit lifting cost increased 6% over fiscal year 2003, due to increased expenses for personnel, materials and third-party services, the operations at Block 18 at PEPSA-Equador, and intervention in wells in Argentina, as well as maintenance expenses in Angola and the United States.